(Reuters) - Shares of Chicken Soup for the Soul Entertainment Inc (CSSE.O), a unit of the popular 1990’s self-help book publisher, fell as much as 14 percent in debut on Friday, giving up all their early gains.
Shares rose as much as 10.5 percent to $13.26, above the $12 IPO price, but reversed course thirty minutes into trading.
The company sold a total of 2.5 million shares, raising $30 million in proceeds. It had initially planned to sell 900,000 shares for $12 apiece, with an option to sell up to 1.6 million additional shares in case of oversubscription. (bit.ly/2idmrEr)
“...there are questions about the company’s valuation and growth potential,” Jay Ritter, IPO expert and professor at the University of Florida said.
“As with all companies, all IPOs, there is the tug of war between the bears and bulls. But it is unusual for such a small company to go public in the United States.”
The company, which trades under the symbol ‘CSSE’ on Nasdaq, filed for an IPO under the Regulation A+ Tier 2 offering which allows smaller companies to raise up to $50 million from non-institutional investors like crowdfunding websites and fans.
The iconic 'Chicken Soup for the Soul' books — which feature true, inspirational stories about people's lives and their experiences — have consistently been New York Times bestsellers, it was on the list continuously from 1994 to 1998. (bit.ly/2icFvCx)
Chicken Soup for the Soul Entertainment signed a deal last year with A Plus, a website founded by Ashton Kutcher, to distribute video content worldwide.
The company reported total revenue of $8.1 million in 2016, up nearly five fold from the previous year.
Chicken Soup for the Soul Entertainment plans to use a portion of the proceeds to repay debt.
HCFP/Capital Markets LLC, The Benchmark Co LLC and Weild Capital LLC were the joint bookrunning managers for the offering.
Additional reporting by Nikhil Subba in Bengaluru; Editing by Shounak Dasgupta